{ "id": 1910538, "name": "QUAPAW CENTRAL BUSINESS IMPROVEMENT DISTRICT v. BOND-KINMAN, INC.", "name_abbreviation": "Quapaw Central Business Improvement District v. Bond-Kinman, Inc.", "decision_date": "1994-02-07", "docket_number": "93-234", "first_page": "703", "last_page": "709", "citations": [ { "type": "official", "cite": "315 Ark. 703" }, { "type": "parallel", "cite": "870 S.W.2d 390" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "Ark. Code Ann. \u00a7\u00a7 14-184-101-130", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 1987, "opinion_index": 0 }, { "cite": "314 Ark. 4", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1912805 ], "weight": 2, "year": 1993, "opinion_index": 0, "case_paths": [ "/ark/314/0004-01" ] }, { "cite": "282 S.W. 358", "category": "reporters:state_regional", "reporter": "S.W.", "year": 1926, "opinion_index": 0 }, { "cite": "170 Ark. 1016", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1371663 ], "year": 1926, "opinion_index": 0, "case_paths": [ "/ark/170/1016-01" ] }, { "cite": "235 Ark. 665", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1684704 ], "weight": 2, "year": 1962, "opinion_index": 0, "case_paths": [ "/ark/235/0665-01" ] }, { "cite": "248 Ark. 1055", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1597723 ], "weight": 2, "year": 1970, "pin_cites": [ { "parenthetical": "improvement district lawfully created assumes the status of a de jure governmental agency" }, { "parenthetical": "improvement district lawfully created assumes the status of a de jure governmental agency" } ], "opinion_index": 0, "case_paths": [ "/ark/248/1055-01" ] }, { "cite": "247 Ark. 983", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1600782 ], "weight": 2, "year": 1970, "pin_cites": [ { "parenthetical": "improvement district is a political subdivision and quasi-public corporation created by the state" }, { "parenthetical": "improvement district is a political subdivision and quasi-public corporation created by the state" } ], "opinion_index": 0, "case_paths": [ "/ark/247/0983-01" ] }, { "cite": "225 Ark. 180", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1642435 ], "weight": 2, "year": 1955, "pin_cites": [ { "parenthetical": "improvement district is not a taxing agency or a subordinate political agency of the state, but is merely a governmental agency" }, { "parenthetical": "improvement district is not a taxing agency or a subordinate political agency of the state, but is merely a governmental agency" } ], "opinion_index": 0, "case_paths": [ "/ark/225/0180-01" ] }, { "cite": "221 Ark. 870", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1656491 ], "weight": 2, "year": 1953, "pin_cites": [ { "parenthetical": "during the time lands are the property of an improvement district, such lands are held by a governmental agency and for governmental purposes" }, { "parenthetical": "during the time lands are the property of an improvement district, such lands are held by a governmental agency and for governmental purposes" } ], "opinion_index": 0, "case_paths": [ "/ark/221/0870-01" ] }, { "cite": "284 Ark. 65", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1878649 ], "weight": 2, "year": 1984, "opinion_index": 1, "case_paths": [ "/ark/284/0065-01" ] }, { "cite": "309 Ark. 491", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1906041 ], "weight": 2, "year": 1992, "opinion_index": 1, "case_paths": [ "/ark/309/0491-01" ] }, { "cite": "Ark. Code Ann. \u00a7\u00a7 14-184-120", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "opinion_index": 1 }, { "cite": "Ark. Code Ann. \u00a7 14-184-101", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "opinion_index": 1 } ], "analysis": { "cardinality": 654, "char_count": 12777, "ocr_confidence": 0.864, "pagerank": { "raw": 1.3582390267534188e-07, "percentile": 0.6349570959542429 }, "sha256": "c32905545a0d4ec182df7a62038978a64ed7d34292a9e56f5dfffda410142ac1", "simhash": "1:ed6b696ccd47f3d4", "word_count": 1997 }, "last_updated": "2023-07-14T19:39:34.144281+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Brown, J., dissents." ], "parties": [ "QUAPAW CENTRAL BUSINESS IMPROVEMENT DISTRICT v. BOND-KINMAN, INC." ], "opinions": [ { "text": "Tom Glaze, Justice.\nQuapaw Central Business Improvement District was created by the Little Rock City Board of Directors for the purpose of providing funds to construct improvements to streets, sidewalks, utilities, curbs and gutters, street lighting, landscaping, and other improvements within the district. On December 1, 1988, Quapaw issued $700,000 in General Obligation Improvement Bonds, and to secure payment of the bonds, it levied a continuing annual assessment of 5% on the real property within its district. The assessments are to be collected by the Pulaski County Collector until the bonds are retired. Quapaw issued a pledge and mortgage wherein the Quapaw District pledged, mortgaged, assigned, and transferred to 1st National Bank of Texarkana, as Trustee for the registered owners of the bonds, the assessments collected and to be collected.\nBond-Kinman, Inc. was engaged as a general contractor to construct the improvements, and at the end of the work, Quapaw failed to make its final payment to Bond-Kinman. Bond-Kinman then sued Quapaw in Pulaski County Circuit Court for breach of contract. Following trial on the merits, Bond-Kinman was awarded a net judgment of $44,076.60. Neither party appealed. Subsequently, Bond-Kinman learned the Pulaski County Collector was holding $55,110 on behalf of Quapaw, and in an attempt to satisfy the $44,076.60 judgment, it filed a garnishment action against the Collector. The Collector answered, admitting it was indebted to Quapaw in the amount of $55,110, and Quapaw responded, stating the funds held by the Collector were pledged and mortgaged for the Quapaw District\u2019s bondholders. Quapaw also moved Bond-Kinman\u2019s writ of garnishment should be dismissed.\nFollowing a hearing, the circuit court denied Quapaw\u2019s motion to dismiss the garnishment, and granted Bond-Kinman judgment against the Collector from which Quapaw appeals. Bond-Kinman argued below, and now on appeal, that the pledge and mortgage made to the bondholders had not been properly perfected under Article 9 of the Uniform Commercial Code, thus, allowing the funds held by the Collector to be subject to BondKinman\u2019s superior lien. Specifically, Bond-Kinman argues Qua-paw\u2019s pledge and mortgage securing the assessments for the District\u2019s bondholders were required to be filed in the Office of the Secretary of State, and Quapaw\u2019s failure to do so, permitted Bond-Kinman\u2019s garnishment of the funds which were intended for the bondholders. We must disagree.\nFirst, we disagree that Article 9 of the Code applies. Section 4-9-104(e) (Repl. 1991) excepts, from the operations of the Article, a transfer by a government or governmental subdivision or agency. Thus, if the Quapaw District is a governmental subdivision or agency, Article 9 is inapplicable and Bond-Kinman\u2019s argument must fail.\nIn determining the status of improvement districts, particularly in Arkansas, a historical review is helpful and is discussed by Horace Sloan in A Treatise on the Law of Improvement Districts in Arkansas (1928). The power of taxation, whether by general taxation or by local assessment, is legislative and cannot be exercised in absence of statutory authority. Additionally, no improvement district may be created or local assessment imposed unless statutorily authorized. The Arkansas Constitution of 1874 contains provisions limiting the maximum rate of general property taxation by counties and municipalities, and prohibiting counties and municipalities from issuing interest-bearing certificates of indebtedness. See generally Ark. Const, art. 16 as amended. Because these constitutional restrictions do not apply to improvement districts, the improvement district has been used in Arkansas as a means of constructing and financing large public improvements that counties and municipalities could not normally afford. Sloan at pp. 2 through 28.\nAs is clearly indicated from the foregoing, improvement districts are agents of the state and derive their limited powers and duties of a public nature by legislative delegation through the taxing power of the state, and \u201cconstitute a separate and distinct species of taxing districts as contradistinguished from counties, municipal corporations and school districts.\u201d Id. at p. 19. Further, there is a wealth of case law acknowledging the agency status of improvement districts as governmental in nature. See Terry v. Starks, 221 Ark. 870, 256 S.W.2d 545 (1953) (during the time lands are the property of an improvement district, such lands are held by a governmental agency and for governmental purposes); Wood v. Henderson, 225 Ark. 180, 280 S.W.2d 226 (1955) (improvement district is not a taxing agency or a subordinate political agency of the state, but is merely a governmental agency); Reeme v. Natural Gas Improvement Dist. No. 2, 247 Ark. 983, 448 S.W.2d 647 (1970) (improvement district is a political subdivision and quasi-public corporation created by the state); Cherokee Village Homeowners Protective Assoc. v. Cherokee Village Road & Street Improvement Dist. No. 1, 248 Ark. 1055, 455 S.W.2d 93 (1970) (improvement district lawfully created assumes the status of a de jure governmental agency).\nBecause an improvement district is an agent of the state, the Quapaw District is excluded under \u00a7 4-9-104(e) as a governmental agency from the UCC and its filing requirements. Accordingly through the statutory lien created under \u00a7\u00a7 14-184-120(b) and 14-184-127(b)(l), the bondholders\u2019 interest is secured and made superior by Quapaw District\u2019s prior pledge and mortgage of its assessments.\nThe special statutory provisions providing for the lien on and the pledge of the district\u2019s assessments to secure payment of the bonds also disposes of Bond-Kinman\u2019s argument that the funds belonging to the Quapaw District were not restricted in any manner while in the possession of the Collector, thus making the assessments subject to garnishment. Bond-Kinman attempts to distinguish Gossett v. Merchants & Planters Bank, 235 Ark. 665, 361 S.W.2d 537 (1962), relied on by Quapaw, wherein this court held that a restricted deposit is not subject to diversion by garnishment or other process, but must be used for the purpose made. See also Geyer & Adams Co. v. Bank of Central Ark., 170 Ark. 1016, 282 S.W. 358 (1926).\nWhile Bond-Kinman may be correct in stating that. the Collector had not placed the District\u2019s pledged funds into a restricted account, the Collector\u2019s failure to do so is not determinative. Again, by statute, the levy of assessments is restricted to the payment of the bonds under \u00a7\u00a7 14-184-120 and 14-184-127. And in accordance with those statutory pledge, security and lien provisions, the language of the bond, itself, restricts the assessment of benefits and taxes pledged to the payment of the bonds. Statutory authorization allowing for the levy and collection of assessed funds, and statutorily mandated language found on the bond control the disposition of any funds collected under the Act.\nAs a final point,-we take note of Bond-Kinman\u2019s argument that the Quapaw District is not a real party in interest because the funds Bond-Kinman attempts to garnish are held by the Collector for the benefit of the bondholders. Thus, under Bond-Kinman\u2019s argument, the Collector and the Trustee for the bondholders are the real parties in interest. Quapaw points out that Bond-Kinman did not argue this point below and Bond-Kin-man does not dispute this. Whether the issue was raised below or not, Bond-Kinman failed to obtain a ruling on the standing issue and matters left unresolved below are waived. Morgan v. Neuse, 314 Ark. 4, 857 S.W.2d 826 (1993). In addition, BondKinman prosecuted this action, and if the Collector and the Trustee for the bondholders should have been parties, BondKinman could have made them parties but chose not to do so.\nFor the reasons cited, we reverse and dismiss.\nBrown, J., dissents.\nThe commentary to this UCC provision explains that because governmental borrowings and assignments are usually governed by special provisions of law, governmental transfers are excluded from this Article. Later in this opinion, we discuss such special provisions here which are a part of the Central Business Improvement District Act, Ark. Code Ann. \u00a7\u00a7 14-184-101-130 (1987).\nSection 14-l$4-127(b)(l) provides:\nThe principal of, interest on, and paying agent\u2019s fees in connection with the bonds shall be secured by a lien on and pledge of, and shall be payable from, the assessments levied against the real property within the district or the revenues derived from the operation of revenue-producing facilities of the district including, without limitation, lease rentals as provided for in this subchapter, constructed or acquired under the provisions of this subchapter.\nThe bond language here does reserve to the District\u2019s Board of Commissioners the right to pay the District\u2019s reasonable and necessary expenses after payment of the bonds.\nThe Collector was, of course, a party to the garnishment action. While the Collector responded to Bond-Kinman\u2019s request for a writ of garnishment, it did not appeal the trial court\u2019s decision granting the writ.", "type": "majority", "author": "Tom Glaze, Justice." }, { "text": "Robert L. Brown, Justice,\ndissenting. The issue in this case is whether an unpaid contractor which constructed the improvements and is a judgment creditor has the right to garnish improvement district assessments collected and held by the county collector. Stated another way, who takes priority to such funds between this contractor with a garnishment lien and the bondholders who claim a prior lien? The opinion says the bondholders have a superior right to the funds but cites no authority to support its holding. I disagree, at least based on what has been presented to this court in this appeal.\nThe opinion is correct that Article 9 of the Uniform Commercial Code does not control this matter. The question is what does. The Improvement District argues that the Central Business Improvement District Act (Ark. Code Ann. \u00a7 14-184-101, et.seq. (1987) decides the issue, and the majority apparently agrees. But the sections of the Improvement District Act, which are adduced in the opinion, do not decide the priority question. See Ark. Code Ann. \u00a7\u00a7 14-184-120, 14-184-127 (1987). Both sections provide that assessments from the properties benefited by the improvements shall be security for the bondholders and that a lien is created. Neither statute, however, decides the conflicting claims question before the court today.\nThe opinion also concludes that the bond documents restrict the assessed funds. Those documents, however, are not before the court because they were not abstracted by the Improvement District, and this court has made it clear that we will not scour the record for evidence to reverse the trial court. Montgomery v. Butler, 309 Ark. 491, 834 S.W.2d 148 (1992); Boren v. Qualls, 284 Ark. 65, 680 S.W.2d 82 (1984). Moreover, the opinion is merely conclusive in stating that the bond language is restric- \u25a0 tive. No doubt the bond documents provide that special property assessments will be used to pay off the bonds. But it does not necessarily follow that the funds held by the county collector are impervious to a contractor\u2019s lien. In short, the issue still remains of whether assessments held by the county collector can be garnished by the builder of the improvements that benefited the assessed properties.\nThe circuit court, in its judgment, did not rely on Article 9 of the Uniform Commercial Code. Rather, it focused on the inherent injustice created by prohibiting the Improvement District contractor, which built the improvements, from collecting on its judgment. Again, the majority opinion in this case does not resolve the issue of the conflicting liens but only refers to the statutes which state that the bondholders have a lien. In addition, this court does not know precisely what the assessments collected by the county collector are for. The contractor contends that the assessments in the collector\u2019s hands may be for administrative expenses of the Improvement District or operation and maintenance expenses. Hence, we do not know how those assessments are restricted, if at all, under the bond documents; when the assessments were paid; or when the pledge and mortgage lien attaches to the assessments. We are making this decision in the dark.\nNo doubt the security of the bondholders must be protected. However, without a more cogent and persuasive legal or factual basis to reverse the circuit court, I would affirm its judgment.", "type": "dissent", "author": "Robert L. Brown, Justice," } ], "attorneys": [ "Mitchell, Williams, Selig, Gates & Woodyard, for appellant.", "Mike Wilson, for appellee." ], "corrections": "", "head_matter": "QUAPAW CENTRAL BUSINESS IMPROVEMENT DISTRICT v. BOND-KINMAN, INC.\n93-234\n870 S.W.2d 390\nSupreme Court of Arkansas\nOpinion delivered February 7, 1994\nMitchell, Williams, Selig, Gates & Woodyard, for appellant.\nMike Wilson, for appellee." }, "file_name": "0703-01", "first_page_order": 737, "last_page_order": 743 }